Treasury: businesses need to be compensated

Financial Secretary to the Treasury Greg Clarke says the mis-selling of products by banks to small businesses is an example of "disgraceful behaviour".

More than 90pc of the complex interest rate derivatives sold by banks to small businesses could have been mis-sold, according to the findings of a review by the Financial Services Authority.

Barclays, Lloyds Banking Group, HSBC and Royal Bank of Scotland have been given the go-ahead to launch a redress scheme for mis-selling victims, with seven smaller lenders to begin compensating customers from February 12.

Together, the banks set aside about £630m to meet the cost of swap mis-selling claims, while Lloyds Banking Group’s current public position is that the costs will be non-material.

Some experts are claiming the bill from swap mis-selling will be measured in the tens of billions of pounds, not hundreds of millions.